A peek at the Fed's model

From the Fed's authors: 

The U.S. labor market is large and multifaceted. Often-cited indicators, such as the unemployment rate or payroll employment, measure aparticular dimension of labor market activity, and it is not uncommon for different indicators to send conflicting signals about labor market conditions. Accordingly, analysts typically look at many indicators when attempting to gauge labor market improvement. However, it is often difficult to know how to weigh signals from various indicators.Statistical models can be useful to such efforts because they provide away to summarize information from several indicators. This Notedescribes a dynamic factor model of labor market indicators that we have developed recently, which we call the labor market conditions index (LMCI). Details of the data, model, and estimation will be presented in a forthcoming FEDS working paper. 

We look forward to reading the paper. 

Hat tip: Brian Wesbury of First Trust.

Robert Pozen on TARP

Robert Pozen:

The lesson from these transactions is clear. If the Treasury bails out large banks in the future, it should demand the same terms as those received by sophisticated institutional investors. Some of the rescued banks will become profitable, while others will become insolvent. Taxpayers need to maximize their gains on the successful turnarounds to compensate for their losses on the bailouts that inevitably fail.

Pozen, chairman of MFS Investment Management, is the author of Too Big to Save: How to Fix the U.S. Financial System

"V" as in victory or V-shaped recovery?

Ever the optimist, Brian Wesbury thinks the economy is turning around.

We have said from the beginning that the recession would end quickly and a V-shaped recovery would follow. Now, a combination of loose monetary policy and reforms to overly strict (and inappropriate) mark-to-market accounting rules have ended the financial panic.

He has the charts to prove his case.